Ottawa signaled it is still trying to keep Kap Paper operating after the company began idling its Kapuskasing mill, Ontario mill this week, citing a lack of immediate federal help.
Industry Minister Mélanie Joly’s office said it had “come to the table” with federal supports and would continue working with the company on a path to resume operations.
The mill employs hundreds and supports thousands of jobs across Northeastern Ontario’s wood and paper supply chain, according to the federal statement.
Kap Paper said Monday it would begin an orderly wind-down after months of talks with governments failed to produce near-term relief.
Terry Skiffington, the company’s chief executive, called it “a heartbreaking day” and said discussions with both levels of government had been productive but that “immediate support” had not materialized.
The company has maintained it pursued a longer-term solution through a federal program and received encouraging signals, but the timing did not align with its cash needs.
Ontario’s government said it has already put significant money into the mill and expressed frustration with Ottawa.
In a statement Tuesday, Joly’s office said the federal government had offered help through programs that include the Strategic Innovation Fund and urged Queen’s Park to “remain in lockstep” as both sides try to preserve jobs.
The province countered that it has provided Kap Paper with more than 50 million Canadian dollars in loans and has activated worker assistance programs, while pressing the federal government to match its commitment.
The differing accounts underscore a familiar dynamic in large industrial rescues, where competing timelines, eligibility criteria, and risk tolerances can derail a deal even when both governments say they want the same outcome.
The stakes are immediate for the mill town of Kapuskasing. Local officials say the facility is an anchor for the regional economy and a vital outlet for wood chips and other by-products generated by area sawmills.
Those links began to show strain within a day of Kap Paper’s move. GreenFirst Forest Products, a major regional sawmiller, said it will temporarily curtail operations at sites in Kapuskasing, Hearst, and Cochrane starting Oct. 6 while it reassesses options.
The company cited the loss of Kap Paper as a primary customer for residuals and warned that the province’s remaining pulp and paper capacity cannot absorb all of the material in the short term.
Unifor, which represents workers at the mill, has called for urgent federal intervention.
The union argues that maintaining an integrated forestry supply chain is critical not only for regional employment but also for national housing goals that depend on domestic wood products.
Employer groups and municipal leaders have voiced similar concerns, pointing to the cascading effect mill closures have on trucking, harvesting, and energy supply in Northern communities.
It remains unclear what mix of supports could keep Kap Paper running.
The company has sought both operating relief and longer-term measures tied to energy costs and cogeneration, while Ottawa’s reference to the Strategic Innovation Fund suggests any federal package would likely be structured around competitiveness and capital rather than day-to-day expenses.
The province’s loan support has bought time, but officials in Queen’s Park have indicated they cannot backstop operations indefinitely.
A rescue that stabilizes the mill could ease pressure on sawmills and trucking firms and support log flows ahead of winter.
If the idling becomes prolonged, more capacity reductions among upstream producers are likely, with implications for lumber prices, transportation contracts, and regional employment.
For Kapuskasing, the difference between a short pause and a long shutdown would be measured not only in lost shifts but in how quickly the broader forest network can rebalance.
Joly’s office framed the next steps as open-ended but active. “We’ve come to the table with federal supports,” it said, adding that Ottawa will keep working with the company and hopes the province stays aligned.
For now, the mill is idling and the clock on a solution is running.
